According to estimates on future demographic trends, Croatia could experience problems with labour shortage, and pressures on the pension system and government budget, Raiffeisenbank Austria (RBA) analysts said.
Dealing with negative demographic trends and structural problems will remain to pose a challenge for macroeconomic policies, RBA analysts added in a recently published report.
Projections of population ageing released at the end of 2017 by the European Commission (EC) have put Croatia among countries with negative trends , and show that by 2030 the country’s population is expected to shrink to 3.9 million, while by 2070 it could further dwindle to 3.4 million, HINA news agency reported on Sunday.
Apart from depopulation in terms of absolute numbers, another trend that causes concern is the continued decline in the share of youths in the total population, as indicated by the continued decline in the number of newborns. The current 14.6 percent share of children aged 0-14 in the total population is expected to drop to 13.6 percent by 2030 and to 13.2 percent by 2070, RBA analysts say in the analysis.
The share of the most productive part of the population – people aged 25-54 – is estimated to drop from 40.3 percent to 38.1 percent by 2030 and to 33.5 percent by 2070, while the share of the working age population group aged 15-64 is expected to go down from 66 percent in 2016 to 55.6 percent by 2070.
“The significant drop in the working-age population will have a considerable impact on the labour market,” RBA analysts said.
They noted that the evident population shrinking and ageing would inevitably lead to a decline in the share of the working age population.
“This will cause labour shortages and create pressures on the pension system and the budget,” the analysts said.
Their estimate is backed by EC projections which show that the share of people aged over 65 in the total population will rise to 31.2 percent by the end of the projection period or by 11.8 percentage points compared to 2016.
The share of people aged over 80 in the total working-age population will rise to 23.3% or 15.8 percentage points more than in 2016.
Population ageing, and the resulting drop in the working-age population group, will continue to hamper positive changes in the labour market, the analysts said.
Structural labour market weaknesses, such as the imbalances between supply and demand, and a low level of employment, are still present, the analysts said, noting that Croatia is also faced with an accelerated process of emigration of the working-age population.
They consider the emigration of the working-age people to be due not only to the openness of the EU labour market and demand for skilled and highly educated personnel, but also due to a protracted recession marked by lack of key structural reforms in the economy.
